EFB Pellets: Indonesia and Malaysia's Huge Potential Ready to be Monetized

Empty oil palm fruit bunches (EFB) are the most abundant solid waste from palm oil mills. Efforts to utilize them have also attracted considerable attention. With hundreds of tons of waste produced daily, it certainly presents a challenge, but also an attractive opportunity. Considerations of investment size and potential profits are key. EFB pellet production is an attractive option given the need for biomass fuel for decarbonization, renewable fuels, and carbon-neutral fuels to achieve Indonesia's Net Zero Emissions (NZE) by 2060.

The global population of palm oil plantations, with Indonesia and Malaysia leading the way, makes processing this material highly attractive. Many machinery companies have focused on empty fruit bunch processing, particularly through size reduction and pressing, but few have focused on producing EFB pellets. This is because empty fruit bunches, with their high fiber content, are more difficult to process than wood materials like sawdust or other agricultural waste biomass. 

Selecting the right, reliable, and experienced production machinery supplier is key to success. Performance guarantees, such as agreed quality and quantity targets, as well as timely machine manufacturing, installation, commissioning, and production, are indicators of the supplier's reliability. A track record is also an important consideration. Furthermore, the high potassium content of empty fruit bunches (EFB) poses a challenge in producing boiler-friendly fuel, particularly for pulverized combustion, commonly used in power plants.

And with the increasing number of companies producing EFB pellets, there will be competition for the supply of empty fruit bunches raw materials, such as PLN EPI (Energi Primer Indonesia) which signed a Memorandum of Understanding (MoU) with PT Biomassa Energi Group (BEG) and G7 Group SP.Z.O.O from Poland which was developed jointly will start operating in February 2026, with an initial production target of 120 thousand tons per year, and will be followed by five additional factories with similar or larger capacities, more details read here. 

OPT Pellets for Biomass Power Plants and BECCS in Japan and Europe

As a tropical region known for biomass heaven, there are numerous sources that can be utilized for biomass pellet production, particularly OPT pellets or oil palm trunk pellets. This potential is certainly in line with global decarbonization efforts to save the earth from climate change and global warming. Indonesia is currently the world's largest palm oil producer, with approximately 17 million hectares of palm oil plantations. Of this area, 9 million hectares are managed by private companies, 550,000 hectares are owned by state-owned companies (PTPN), 6.1 million hectares are owned by smallholders, and the remainder remains unverified. Crude palm oil or CPO productivity has stagnated over the past five years due to the slow pace of replanting, which is around 45 million tons per year. Therefore, replanting, especially for smallholders, must be encouraged.

Most palm oil companies affiliated with GAPKI have conducted replanting periodically or once a year with an area of ​​4-5%. The palm oil companies that are members of GAPKI are 731, while according to BPS 2023 the number of palm oil companies in Indonesia reached 2,446 companies, spread across 26 provinces. Meanwhile, in smallholder palm oil plantations, replanting is very small, namely in 2024 alone with a target of 180,000 hectares (around 3% of smallholder palm oil plantations) but the realization is less than 40,000 hectares (0.7% of smallholder palm oil plantations) and even because it is so far from the target set in 2025 the government's target for replanting smallholder palm oil plantations was reduced to only 120,000 hectares (around 2% of smallholder palm oil plantations).

With an average of 125 trees per hectare of palm oil plantation, each tree yielding an average dry weight of 0.4 tons, this yields 50 tons of dry biomass per hectare. For an area of ​​10,000 hectares, this translates to 0.5 million tons of dry biomass, and for an area of ​​100,000 hectares, this translates to 5 million tons of dry biomass. Optimistically, Indonesia could achieve 5% replanting, or 820,000 hectares, which would yield 41 million tons of dry biomass per year. Malaysia, with 5% replanting, or 285,000 hectares, would produce 14.25 million tons of dry biomass per year.

For a more practical calculation, let's consider the average palm oil company group in Indonesia with five palm oil mills and 50,000 hectares of palm oil plantations. With annual replanting of 5% of the total plantations, 2,500 hectares are replanted annually. This replanting will produce 125,000 tons of dried oil palm trunks. This volume will then be used to produce oil palm trunk pellets, or OPT pellets, assuming 3% loss during the production process. This yields 121,250 tons of OPT pellets per year.

Using a Handymax vessel with a capacity of 25,000 tons per shipment, five shipments are required, or using a Panamax vessel with a capacity of 50,000 tons per shipment requires two shipments plus one Handymax vessel. Alternatively, using a vessel with a capacity of 10,000 tons per shipment requires approximately 12 shipments per year. Shipments with large capacity handymax and panamax vessels are suitable for the European market, while smaller vessels, namely 10,000 tons/shipment, are suitable for the Japanese market.

Japan, with around 290 biomass power plants, should technically be able to move towards BECCS more quickly, but it's just a matter of policy and regulation. Installing CCS (Carbon Capture and Storage) units in biomass power plants makes the plant's operation carbon negative, or carbon (dioxide) removal (CDR) or Greenhouse Gas Removals (GGR). Furthermore, Europe has a successful example of BECCS implementation, namely the Stockholm Exergi BECCS project. This Stockholm project, based on sustainable biomass fuel, has secured one of the world's largest carbon sequestration agreements with Microsoft.

Furthermore, policy support for biomass power plants with CCS/BECCS or those capable of CDR/GGR is also increasing, as in the UK. This includes the indefinite extension of support for biomass power plants to allow time for plants to transition to BECCS. Modifications and retrofitting of existing power plants will eliminate millions of tons of CO2 annually while still generating electricity from renewable sources. This potential can only be maximized with government support for the transition to BECCS.

Biochar as Deforestation Solution in Palm Oil Plantations and EUDR

The development of the palm oil industry and its plantations in Indonesia is very rapid, especially in the last 10 years and currently the area of ​​Indonesian palm oil plantations is estimated to reach 17 million hectares. As the largest vegetable oil producing plant in the world and the largest palm oil plantation area in the world, of course palm oil has a strategic value in the Indonesian economy. The average speed of Indonesian palm oil plantation area is 6.5% per year or equivalent to around 1 million hectares per year for the last 5 years, while the increase in palm oil fruit production or FFB (fresh fruit bunches) is only 11% on average.

Even the largest land expansion occurred in 2017, which increased by 2.8 million hectares. From 2015 to 2019, the total area of ​​palm oil plantations increased by 3.7 million hectares. The extensification or expansion of palm oil plantations has been widely "accused" and has become the focus of the world as a result of the conversion of forest land, resulting in a lot of deforestation to be converted into palm oil plantations.

Pressure from the European Union in particular, due to these conditions, has worsened the image of Indonesian palm oil, which in turn has affected the selling price of palm oil products, both CPO and its derivative products. Improving this image is also not easy. One effective effort is to stop the extensification efforts so that forest land remains forest land and does not turn into oil palm plantations. The European Union on Deforestation-free Regulation (EUDR), which will come into effect on December 30, 2024, as an effort to prevent deforestation, is also an important consideration. The regulation requires consumers and producers along the supply chain of certain commodities to conduct due diligence and risk assessments to ensure that their products do not contribute to deforestation. The EUDR also applies a tiered inspection and penalty system based on the level of risk perceived in the country of origin.

With the extensification of oil palm land of more than 1 million per hectare each year but the increase in oil palm fruit production is only 11%, it is certainly less attractive and must be avoided, especially with the world's spotlight on the increasingly rapid deforestation. This also increasingly indicates the low productivity of palm oil plantations. In fact, by improving soil quality, palm oil fruit productivity can be increased significantly and the opening of new land for the creation of palm oil plantations can be avoided. Biomass waste in palm oil plantations and in palm oil mills can be used for biochar production as a solution to this problem.

With the increase in productivity of fresh fruit bunches (FFB) with the use of biochar, new palm oil plantations do not need to be opened again. Assuming an average increase in productivity of 20%, CPO production will also increase by 20% or equivalent to 2 million tons. This increase will be equivalent to opening new land covering an area of ​​more than 2 million hectares. Of course, it is not a small area of ​​land. With a 20% increase in production, it is very likely that national needs for CPO in particular have been met and so too for the export market. Another advantage of using biochar is as a climate solution as carbon sequestration/carbon sink. So the two main problems in the palm oil industry in the form of increasing productivity and climate change resilience can be overcome at once with the application of biochar.    

Estimated Increase in POME Biogas Production in Indonesia and Malaysia with the Addition of Biomass Briquettes

 

The important thing that needs to be done to implement a research in a commercial unit is the technical and economic side. A research product that has been tested technically needs to be evaluated on the economic side. This is because in commercial units, the economic aspect is the main consideration for the implementation of a certain technology. A technology implemented with the intention of improving the performance of these commercial units but not providing economic benefits generally will not attract many. Likewise, vice versa. How much economic benefit can be obtained from implementing this technology? Is it worth the effort? These two questions will be considered next.

In the biogas unit (mostly for electricity production) the above rules also apply. And especially the biogas unit in Indonesia and Malaysia as the largest CPO (crude palm oil) producer in the world, the POME biogas unit or palm oil mill liquid waste has been built as a means of overcoming the problem of liquid waste and also energy production, especially electricity. Tens or even hundreds of POME biogas units have been built in Indonesia and Malaysia, but that number is not yet comparable to the number of palm oil mills in Indonesia and Malaysia which has reached thousands. And more specifically, the number of POME biogas units in Indonesia is less or a smaller percentage compared to palm oil mills compared to Malaysia. Why did this happen? For more details, please read here.

And because the commercial end product of the commercial biogas unit is electricity, the price of electricity will greatly affect the operation of the biogas unit. Research conducted at Aarhus University in Denmark shows that biomass briquettes can significantly increase biogas production, that is, every 1 tonne of straw briquettes added has increased biogas production by an average of 400 cubic meters. With a biogas caloric value of around 4500 kcal / m3, each tonne of addition of straw briquettes will increase calories by 1,800,000 kcal in the form of biogas. for more details, please read here. In the case of POME biogas, if empty fruit bunches (EFB) are used as raw material for briquettes, it could be an increase in the biogas product produced. This is because the EFB have undergone a sterilization process (steamming) so that the biomass pores are more open so that the surface area is larger. The briquetting of the EFB will also further expand the surface of the biomass so that the anaerobic fermentation process is more perfect and the biogas product increases.

Assuming the electricity price per kwh in Malaysia from biogas is 0.49 RM (IDR 1,715) and IDR 1000 in Indonesia, with the increase in biogas produced above, Malaysia will be more attractive and profitable. However, this increase in biogas production has also yielded attractive advantages when applied, both in Indonesia and Malaysia. The estimate assuming a biogas reactor capacity of 150,000 tonnes and with the addition of 15,000 tonnes of biomass briquettes (maximum 10% of the reactor volume) has resulted in profits of nearly 27 billion rupiah/Rp (application in Indonesia) and 14 million Malaysian ringgit/RM (application in Malaysia). Under these conditions, it is actually very interesting to implement this research on POME biogas power plants in Indonesia and Malaysia. Apart from reducing solid waste from the palm oil industry, increasing biogas production which is proportional to electricity production will provide attractive benefits for the palm oil industry.

Delay in the Construction of Biomass Power Plant in Japan and Its Impact on PKS Supply from Indonesia and Malaysia

An ambitious program always requires careful preparation to achieve the goals as expected. Moreover, the ambitious program is related to a strategic sector such as energy, so preparation also needs to be more serious. Hurry to be realized immediately and reach the target will further aggravate the situation and bring losses in the end. This readiness also involves many parties so that synchronization is not easy and supporting infrastructure. One of the ambitious programs in the energy sector, especially renewable energy and more specifically the use of biomass, is a power generation program in Japan. Japan as the most energy-dependent country, the sustainability of energy supply is very important, so government policy is needed for this. After the tragedy or accident at the Fukushima nuclear plant in March 2011, Japan began using renewable energy as an important energy source. The use of biomass as an energy source is targeted at 4-6 GW by 2030, and even this condition spurs developers so that there is a surplus of almost 3 times as much. This condition makes a special policy to control this so that not all are approved for the development of the power plants.

Regarding the use of biomass as an energy source, European Union countries even put a portion of biomass at 70% in their renewable energy program. The first RED (Renewable Energy Directive) program from the European Union will end in 2020. RED I aims to reduce emissions by 20% and the use of renewable energy to reach 20% by 2020, the program is also well known for its 20-20-20 target. At present the European Union has also prepared RED II to replace RED I which will soon be over. At the RED II the target to be achieved is a 30% reduction in emissions and 32% renewable energy use. For biomass energy, Europe is currently the largest producer of wood pellets, estimated at 13.5 million tons / year while consuming 18.8 million tons / year year, meaning there is still a shortfall of 5.3 million tons / year. America and Canada are the main suppliers of wood pellet needs of European countries with the majority of the use of wood pellets for electricity generation. Indonesia as a tropical country and rich in various biomass, especially woody biomass, has the potential to become the world's leading producer of wood pellets. Along with the increasing portion of renewable energy in the RED II program that will be proclaimed, the use of wood pellets is also getting bigger.

Map of Japan's biomass power plant status, red means it's already operating, yellow means that in the development stage, blue means planning.

Japan applies FIT (feed in tarrif) to encourage the use of renewable energy in electricity production. FIT has been implemented since 2012 and there are significant differences regarding the company's interest in the FIT. There has been a surge in interest of up to tens of times compared to before it was implemented by FIT with the number of power plants reaching 1,028 in 2017 or 5 years after the application of FIT. The highest surge of interest in solar power plants is solar PV up to more than 10 times, while for biomass it has jumped about 3 times. PKS is even a favorite fuel for the power plants. In March 2017, 38% of the FITs approved in the "general wood" category used PKS as their fuel or energy source. This makes export PKS can be a very attractive business opportunity. Electricity production costs also decreased with the implementation of the FIT. The biggest reduction in costs in solar PV power plants reached 38%, while in biomass power plants with an average capacity of 19 MW there was a 16% reduction in costs. While a review of the environmental aspects of carbon emissions (CO2 reduction) has also decreased by 6 points.

In 2019, it was originally planned that most of the power plants that had been built had been operating, but this year there were still many power plants not yet operating. This means there is a delay than planned. There are many factors that cause delays in both technical aspects such as connection to the grid and manufacturing the equipment and non-technical aspects such as capital and the availability of biomass fuel supplies. One example on the equipment side is that there are only 4 or 5 boiler manufacturers for power plants in the country so overwhelmed with high demand. Many of these power plants use biomass fuel in the form of wood pellets and PKS. For wood pellets Indonesia also has a great opportunity as will be done by Sri Lanka, for more details can be read here. As for PKS as the largest CPO producer in the world with palm oil plantations reaching 12 million hectares, Indonesia's potential is very large, second in Malaysia, with palm oil plantations reaching 5 million hectares.

PKS exports from Indonesia had a downturn some time ago due to high export duties ( tax plus levy) which totaled $ 17 per ton, whereas this did not happen in Malaysia because it was not charged as in Indonesia. Export duty out of PKS in Indonesia is associated with CPO prices. Many parties actually want the PKS exit duty in Indonesia to be eliminated as in Malaysia or at a minimum reduced so that it can be more competitive. This is because PKS is waste and exporting is part of the waste solution. The 15% decline in CPO prices in the international market turned out to have reduced PKS export levies to 0 so that they only paid $ 7 per ton of tax. But when CPO prices rise, the export duty (export tariff) also rises. Based on the Regulation of the Indonesian Minister of Finance (PMK) No. 152 / PMK.05 / 2018 which has been in effect since December 4, 2018, the government levy to be zero (US $ 0 / ton) all export levy rates if international CPO prices are below US $ 570 / ton. Meanwhile, if the CPO price is in the range of US $ 570-US $ 619 / ton, then the PKS export levy becomes US $ 5 / ton, whereas if the international CPO price has returned to normal, which is above US $ 619 / ton, PKS export levies become $ 10 / ton. If added with a tax of US $ 7 / ton, then when CPO prices are below US $ 570 then only tax is worth US $ 7 / ton like now, but later when CPO prices rise in the range of US $ 570-US $ 619 / ton, then export taxes and levies become US $ 12 / ton, whereas when CPO prices have been above US $ 619 / ton, PKS export taxes and levies have become US $ 17 / ton. Higher taxes and export levies make PKS prices less competitive.

PKS exporters who have collected a lot of PKS in the hope that they can be sent or exported in large numbers by 2019 are disappointed. Expectations and plans did not match reality. Japan is still continuing the FIT program but the realization is expected to have a delay. The collection and accumulation of PKS for a long time will not only damage the PKS if it is piled up too long, but of course it will cost more for storage. The planned realization, which was supposed to be 2019 but backwards become 2022-2023, would certainly wait for very long 3-4 years for the storage of the PKS. Whereas for wood pellet fuels for 3-4 years, it can be used to make energy plantations and wood pellet factories. The potential of industrial plantations (HTI) for energy plantations and production of wood pellets in Indonesia is very large, for more details can be read here.

Eco-Tourism with Palm Oil Plantation

"The Muslims are syirkah (shariah business cooperation) in three ways, in terms of grasslands (land), water and fire (energy)". (Hadith narrated by Sunan Abu Daud)

Food, energy and water (FEW) is a matter of essential material for human life. The next generation and children must be introduced and understood about this. Among the many subjects taught in school, the topic of discussion about FEW must also receive an adequate portion. At the macro level, we witness that a country and nation will not be independent and sovereign if they are unable to be independent and sovereign in the affairs of the FEW. By introducing it from the beginning, the true understanding of FEW will be embedded both for human biological life and for its strategic role in the world arena.

Indonesia is the largest palm oil producer in the world with the plantation area more than 12 million hectares, palm oil production (both CPO and PKO) reaching more than 40 million tons / year with more than 1,000 CPO mills. As an effort to inculcate FEW's understanding, palm oil plantations can be used as educational facilities which are packaged into eco-tourism for palm oil plantations. Palm oil producer regions can make eco-tourism. The location of palm oil plantations that are easy to access, high in productivity, well cared for, the scenery is beautiful maybe with the presence of lakes, water fall and so on and equipped with various facilities and infrastructure to support the excellent development of eco-tourism.

Students in non-palm oil production areas, such as in Java, Madura, Bali and Nusa Tenggara, are still many who do not know about palm oil trees, although every day they eat fried foods using palm oil. Whereas in most of these areas the majority of Indonesia's population is located or densely populated areas. If children and the next generation do not know the potential of their country, of course this is very unfortunate. It is hoped that by visiting the eco-tourism of palm oil plantations, students and future generations will become more open-minded and more concerned about maximizing it. With visits to these tourism objects, they can see how palm oil is planted, maintained until it continues to be able to produce and still pay attention to environmental aspects to industrialization and provide benefits so that it becomes a profession of choice for some people and contributes to the country.

The palm oil plantation eco-tourism is also a medium to fight against the palm oil black campaign which is currently mostly carried out by western countries. In addition, the promotion of palm oil can also be done in these tourism objects. In addition to domestic tourists, especially students, these attractions can also attract tourists from overseas. With good tourism management, the expected goals can be achieved. Currently halal tourism (Halal Tourism / Islamic Tourism) has also begun to be promoted, and environmentally friendly tourism of palm oil plantations can become part of halal tourism. Islamic-based tourism management is not only limited to material worldly goals, but also gives blessings and blessings from Allah SWT which has an afterlife (akhirat) dimension.